Abstract

The case gives an overview of the merger between two leading players in the global computer industry - Hewlett -Packard Company (HP) and Compaq Computer Corporation (Compaq). The case explores the reasons for HP's failure to realize the synergies identified prior to the merger. It highlights that the leadership, legacy and cultural issues play an important role in mergers. The case describes in detail the rationale for HP -Compaq merger, problems faced in integrating the merged entities and whether the merger made business and economic sense. It also describes the product profile of the merged entity and how the new HP compares with its major competitors, IBM and Dell Computers. Finally, the case presents the challenges faced by the new CEO of HP, Mark Hurd, in mid -2005. The case is designed to help students critically analyze a merger deal and understand the various issues involved such as product synergies, cost savings and technological compatibility. The case also provides an insight into the possible hurdles that might crop up while implementing a mega - merger.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The basic objectives underlying the merger move between HP and Compaq
• The possible reasons for unsuccessful mergers and how mergers fail to create shareholders’ value
• Role of a leader in making merger successful
• The importance of cultural compatibility in making mergers successful.

Keywords

HP, Compaq, Mergers and Acquisitions, Merger Integration, Analysis of a Merger, Product Integration, Cultural Mismatch, Competitive Advantage, Restructuring, HP's Corporate Organization, Dell Computers, IBM